Corporate Carbon Footprints: Who Actually Cut Emissions in 2026
Corporate carbon footprint reporting became a standard part of corporate sustainability strategies around 2021. Almost every large company has one now. Sustainability ratings firms built entire businesses around evaluating them. The EU passed mandatory disclosure rules. California passed stricter ones.
In May 2025, Microsoft released its FY2024 sustainability report. The corporate carbon footprint had grown 23.4% since the year Nadella made his carbon-negative pledge. Chief sustainability officer Melanie Nakagawa’s framing in the report was “the moon has gotten further away.”
That phrase appeared in a document produced by the company’s own sustainability team.
What the numbers actually say
Microsoft’s 2024 Environmental Sustainability Report found emissions between 29% and 40% higher than when Nadella made his 2030 pledge, depending on how you calculate it.
Building data centres at AI scale requires manufacturing steel, concrete, and hardware. That supply chain footprint is driving the increase. The operational electricity, by contrast, Microsoft has largely addressed through renewable energy contracts.
The company is doing real things. Billions in renewable energy commitments. Mass timber data centres. LEED Platinum facilities in the UK. Scope 1 and 2 emissions fell from the 2020 baseline. Those are the categories the company can most directly manage, and the reductions are real. They’re also roughly 3% of total emissions.
Scope 3 is the rest of it. In FY2024, Scope 3 represented just over 97% of Microsoft’s total carbon footprint. In 2023, that category rose 30.9%. FY2024 brought another increase. Sustainability reporting often highlights areas of improvement, while less favorable trends may receive less prominence in disclosures.
The gap the SEC left open
When the SEC finalised its climate disclosure rule in March 2024, Scope 3 reporting requirements weren’t included. The SEC’s own chair stated the official reasoning: based on public feedback, Scope 3 would not be required at this time.
Scope 3 represents somewhere between 70% and 97% of most large companies’ total footprint, depending on the industry. The category excluded from mandatory reporting requirements is also the one that accounts for most emissions. The rule’s trajectory got worse from there. The SEC stayed the entire rule on April 4, 2024, pending litigation. The Commission voted to end its defence in March 2025.
On May 29, 2026, the SEC proposed to rescind the climate disclosure rules in their entirety, citing statutory overreach. The comment period runs until August 3, 2026. Federal climate disclosure requirements, which never included Scope 3, may not materialise at all.
California’s SB 253 goes further than the federal rule ever did. Columbia Law School’s Climate Law Blog reported that the California Air Resources Board is expected to issue proposed SB 253 rulemaking in early 2026, extending full Scope 3 disclosure to large companies operating in the state, regardless of incorporation. For global companies, maintaining separate disclosure regimes by jurisdiction isn’t practical.
California’s requirements often influence broader corporate reporting practices and may carry increased significance amid the evolving federal regulatory landscape.
What corporate carbon footprint labels actually mean
The table maps how common sustainability claim types are understood in practice, which differs from how they’re often understood.
| Claim Type | What It Actually Means | What It’s Often Mistaken For |
|---|---|---|
| Carbon neutral | Emissions are offset through purchased credits | Actual emissions have been reduced |
| Net zero target | A future commitment to balance emissions against removals | Current emissions are under control |
| Science-based target | Reduction pathway validated by SBTi, aligned with 1.5 °C | Confirmation that reductions are happening on schedule |
| Scope 1 and 2 reductions | Direct and purchased-energy emissions fell | A meaningful share of the total footprint improved |
The Science Based Targets initiative validates the credibility of a company’s planned emissions-reduction pathway, rather than verifying ongoing progress against those targets. SBTi doesn’t track whether Scope 3 supply chain emissions are increasing even as Scope 1 and 2 reductions occur.
Google’s data centre energy consumption grew 17% in 2023 while the company maintained its 100% renewable energy claim. Neither statement cancels the other. They describe different things.
The accounting structure enabling it
Understanding a corporate carbon footprint requires examining how emissions are measured and disclosed across Scope 1, 2 and 3 categories.
There’s a version of this worth acknowledging that’s optimistic. Corporate Scope 3 tracking has improved year over year. Voluntary disclosure frameworks pushed measurement forward faster than most mandatory regimes would have. The EU CSRD and California SB 253 are converting some of that voluntary progress into legal requirements.
A key challenge is that current reporting structures can highlight progress in Scope 1 and Scope 2 emissions while Scope 3 emissions continue to increase. Carbon offset purchases that satisfy a “carbon neutral” claim don’t reduce emissions; they compensate for them, with varying effectiveness. A 2023 Guardian investigation found over 90% of Verra-certified forest offset credits were likely worthless. While such claims may comply with existing reporting frameworks, they do not necessarily reflect reductions in underlying Scope 3 emissions.
Diligent’s analysis of the disclosure landscape highlighted the core problem: Scope 3 can account for over 90% of a corporate carbon footprint, and failing to disclose it likely misrepresents the actual environmental impact. California’s SB 253 removes the option to opt out of measuring it.
Whether measurement leads to a reduction depends on what happens after the data is collected.
Distilled
Microsoft’s Scope 3 emissions represent 97% of its total corporate carbon footprint and have grown in every reporting period since Nadella’s carbon-negative pledge. The company has documented operational progress on the remaining 3%, and Nakagawa described the moon as moving farther away in Microsoft’s own sustainability report. The 2030 carbon-negative target is still on the company’s website.
On May 29, 2026, the SEC proposed to rescind its climate disclosure rules entirely. California will still require Scope 3 disclosure under SB 253. For companies already tracking Scope 3 internally, California’s requirements mandate public disclosure, and external pressure to explain what the numbers mean is growing.
That pressure doesn’t exist as long as the numbers stay internal. The gap between the federal retreat and California’s advance is where accountability now sits.
Most sustainability communication blends future commitments with current reporting in ways that make them appear to be the same category of evidence. The net-zero target reflects what a company plans to achieve, while its corporate carbon footprint disclosures show what is happening today. Separating those two things consistently, at scale, is what external accountability frameworks haven’t yet managed to enforce.
